Auditing: Examining Self-Interest Threats, Objectivity, and Confidentiality in Audit Practices

Running head: AUDITING
Auditing
Name of the Student
Name of the University
Author’s Note

1AUDITING
Table of Contents
Question 1..................................................................................................................................2
Requirement (a)......................................................................................................................2
Requirement (b).....................................................................................................................2
Requirement (c)......................................................................................................................3
Requirement (d).....................................................................................................................3
Requirement (e)......................................................................................................................4
Requirement (f)......................................................................................................................4
Question 1..................................................................................................................................5
Requirement (a)......................................................................................................................5
Requirement (b).....................................................................................................................5
Requirement (c)......................................................................................................................6
Requirement (d).....................................................................................................................7
References..................................................................................................................................8

2AUDITING
Question 1
Requirement (a)
According to the given scenario, Alfred Jarmon provides the recommendation to his
audit clients for purchasing the products of Computer Solution at the time to provide
bookkeeping, taxation and management services for Luner Ltd. He receives 10% commission
for referring the products of Computer Services. According to Section 240.5 Referral Fees
and Commissions of APES 110, self-interest threat related to audit objectivity can be
developed in case any third party provides the auditors with commission for referring their
products or services1. It can be said after applying this principle in this current situation that
self-interest threat of audit objectivity can be created due to the fact that Alfred Jarmon
receives commission from Computer Solutions. In this situation, it is likely that the auditor
may not perform the audit works in the objective way. For this reason, this situation leads to
the principle of objectivity2.
Requirement (b)
According to the given scenario, Wrench and Company maintain the information of
this clients in the office computer which is used by all the clients of Wrench and Company
when required. According to Section 140 Confidentiality of APES 110, there is a restriction
on the auditors from sharing or disclosing the business information of the audit clients to any
outside party in the absence of proper approval of the client3. It can be said after applying this
rule in the current situation that by getting access to the main computer, the audit clients of
Wrench and Company can access the audit information of other clients in the absence of any
1 "APES 110 Code of Ethics for Professional Accountants". Apesb.org.au, 2019. Online. Internet. 29 Jan. 2019. .
Available: https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf.
2 Tepalagul, Nopmanee, and Ling Lin. "Auditor independence and audit quality: A literature review." Journal of
Accounting, Auditing & Finance 30.1 (2015): 101-121.
3 "APES 110 Code of Ethics for Professional Accountants". Apesb.org.au, 2019. Online. Internet. 29 Jan. 2019. .
Available: https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf.